Standing Committee D

[Mr. Eric Forth in the Chair]

Employment Relations Bill

Clause 5 - Union communications with workers after acceptance of application

Amendment proposed [this day]: No. 24, in 
clause 5, page 6, line 11, at end insert— 
 '(1B) If information is sent out by unions, employers or non-unionised workers which is subsequently proved to be inaccurate or to contain misrepresentations, the CAC shall declare the resulting ballot invalid and any resulting union recognition shall be quashed.'.'—[Mr. Bellingham.] 
 Question again proposed, That the amendment be made.

Jonathan Djanogly: We are debating a situation where a ballot has not yet taken place and the unions wish to send missives to workers. The purpose of the amendment is to ensure that if information sent out by unions, employers or non-unionised workers is subsequently proved to be inaccurate or to contain misrepresentations, the Central Arbitration Committee should declare the result invalid and any resulting union recognition should be quashed.
 I concede that the drafting of the amendment is not of the high quality that we would expect from civil servants, but the principle is sound. Let me give a few examples. What if a union that is desperate for recognition makes misrepresentations about the company or other unions that could be competing with it for recognition, or about non-unionised workers in relation to statements or the positioning of non-unionised workers within that company? The basis of the ballot might be morally invalidated by those misrepresentations. The Bill does not deal with such an instance. As has been said, the Bill sits on top of many other Acts and I may have overlooked the legislation that deals with this issue. It is something that we should address.

Jon Cruddas: Conversely, does the hon. Gentleman accept that if an employer spread false information during the three-month period before the ballot, there might be a procedure to grant automatic recognition? It could be an even-handed process of perceived misinformation that is transmuted through the process.

Jonathan Djanogly: As the hon. Gentleman will note from the amendment, I have provided for employers and non-unionised workers to be included. Whether that should lead to automatic recognition is a leap; the one
 does not equal the other. The situation should be addressed. The company has a legal relationship with the workers.

Bill Tynan: Does the hon. Gentleman accept that the proposal could enable an employer or a non-union member to deliberately mislead and have the ballot quashed, thus preventing natural justice?

Jonathan Djanogly: No. If a misrepresentation is made, it should be addressed. The important point to make here is that the CAC has the duty to send out the information. That creates a complicated legal situation. What if the information that the CAC sends out is wrong? The CAC receives the information from the union, but what if it is wrong? Who is responsible? I am not sure and the Minister should address that. The union has no locus at that time.

Bill Tynan: Does the hon. Gentleman accept that an employer could deliberately provide misinformation for the CAC to send out, knowing that the ballot would then be disqualified?

Jonathan Djanogly: The Minister may wish to clarify that issue. The employer does not have to send out information through the CAC. The employer has an existing legal relationship with his employees and can send them information at any time. If such information contains misrepresentations, the employee has a right of breach of contract. That is not the situation here; there is a fundamental difference.
 At the pre-ballot stage that we are discussing, the union would not even have had a ballot. There is no legal contractual relationship between the union and the CAC, or between the union and those employees who might become subject to recognition in due course. It is a different legal relationship.

Jon Cruddas: Does the hon. Gentleman accept that an employer could intimidate his work force prior to the implementation of the statutory recognition procedure for the ballot? What is his proposed remedy where there is intimidation of the work force in anticipation of statutory recognition of the ballot?

Jonathan Djanogly: If there were serious intimidation of the work force, an employee could claim either constructive dismissal or unfair dismissal. There are existing remedies for an employee who is subject to intimidation, but there are no such remedies in the converse case; if a union were to put out misrepresentations about an employer. The issue of discrimination was included in an amendment that was not selected and will have to be inserted as a new clause later on.

Hywel Williams: Does the hon. Gentleman accept that the amendment is flawed? Whoever is at fault, it is always the union that suffers. The amendment states that the
''resulting union recognition shall be quashed'' 
whoever is at fault.

Jonathan Djanogly: That ties in with the previous question. The contractual relationship is separate. There is a contractual relationship between the employee and the company that provides remedies if, for example, there is misrepresentation or intimidation.
 There is no such contractual relationship between the union and the people who are going to be balloted at that time. Can the Minister tell us who is answerable in such a case? Would the CAC be held responsible if it sent out information received from a union that was a misrepresentation or caused damage in some way? What other legislation answers that question? 
 No one carries the buck for misrepresentation in the Bill. The unions do not. All they have to do is pass on information—whatever it may be—to the CAC. The CAC does not have any responsibility either. In real life, I imagine that the CAC would look at representations that come to it from the union and, if any part of those were misrepresentations or could be damaging in any way, the CAC would probably have a word in the union's ear. But that is not included in the Bill in any way, shape or form. It is an omission. The amendment is aimed at bridging that gap.

Gerry Sutcliffe: Mr. Forth, I welcome you to the Chair.
 As my hon. Friends the Members for Dagenham (Jon Cruddas) and for Hamilton, South and the hon. Member for Caernarfon (Hywel Williams) indicated—and the hon. Member for Huntingdon (Mr. Djanogly) accepted—the technical aspects of the amendment do not follow through. It is technically inept. On all occasions, the guilty party would be the trade union. It would not matter whether it was the employer's fault, or anyone else's; the union would be left with the problem of the recognition procedure being stopped. 
 We are trying to establish the principle that there should be a code of practice for recognition ballots that makes it clear that parties should not use defamatory or provocative material, or undertake negative campaigning. The Government are concerned that there have been examples of employers using union-busting tactics by employing companies, mainly from the US and elsewhere, to intimidate workers into not participating in recognition—[Interruption.] 
 The Chairman: Order. Will hon. Gentlemen either not conduct conversations or conduct them outside? They certainly should not conduct them in between the Minister and the hon. Gentleman whose question he is answering.

Gerry Sutcliffe: Thank you, Mr. Forth.
 We will consider the issue that I have mentioned in debates on other amendments. The sanction in amendment No. 24 is very harsh. There would be only one guilty party—the union—even if the inaccurate information came from elsewhere. Once there was a mistake, even a minor one, that would be it. We must be careful to recognise what we are trying to achieve and the backdrop to that. The Government are trying 
 to make the situation easier and fairer on all sides. I hope that no side—union or management—would deliberately mislead a work force or make libellous statements about another party.

Jon Cruddas: Does my hon. Friend the Minister anticipate a code of practice that is binding on both sides in the process to ensure a set of protocols that should not be breached? That would ensure that there were no intimidatory tactics by the union or the employer, and that employees were safeguarded from such activities during the totality of the recognition procedure.

Gerry Sutcliffe: I am considering that with regard to the evidence that is coming to us from a variety of organisations. In relation to intimidation on either side, there is currently a code of practice, which will have to be updated after the Bill receives Royal Assent.
 The measure is about a spirit of partnership and our objective in relation to information being balanced for both sides. The employer has the opportunity to give his or her employees as much information as possible. The non-union person has the right to speak to the work force, as we have said, but the union would be at a disadvantage under the amendment. We have accepted the principle that was set out and we would not want either side to involve itself in intimidation. There are sufficient safeguards with the existing code of practice. There could be recourse to the law on libel and other things could happen if either party went down that route. I think that there are sufficient safeguards to offset the concerns expressed by the hon. Member for North-West Norfolk (Mr. Bellingham). Also, the amendment is flawed, and I ask him to withdraw it.

Jonathan Djanogly: The Minister has made some concessions, in so far as he sees that there is a problem, for which I thank him. However, I should like to pursue the point slightly, because I am still not entirely sure who takes responsibility for misleading information. The information goes from the union to the CAC and then on to the employees. Does that mean that the CAC takes responsibility if information is misleading, negligent or will create harm? That needs to be addressed.
 My other point is that we keep hearing from Labour Members that this measure is about management and unions, but that is not necessarily the case. Unions often compete against one another in pre-ballot situations. I do not want to say that it is a case of them against us, because that is not how it is in real life. There are often conflicting parties, whether they are the unions, people who do not want to be unionised or the companies.

Gerry Sutcliffe: The responsibility for the literature lies with the people who provide it. If that were the union, it would be the union's responsibility. If the literature were found to be libellous, the CAC would take a view and deal with the situation during the procedure. The union involved would have to watch out; if the CAC said that the process had been faulty, the union would be prevented for three years from
 trying to apply for recognition again. It will need to be careful all the way through not to jeopardise the procedure.
 As we discussed earlier, the CAC is a strong body in terms of how it safeguards its information and its responsibilities, as is the qualified independent person. If information flows that the employer sees as libellous, of course, they would have the right of reply. Few employers would not take up the opportunity to reply quickly to what they saw and to use it as a mechanism against the union in their dealings with the work force. 
 If a union does not go through the process properly, it will be prevented from applying again for three years. That is a strong sanction. I think that we have covered the issue and I ask the hon. Member for North-West Norfolk to withdraw the amendment.

Henry Bellingham: Mr Forth, I apologise for my slight misdemeanour a moment ago. I can see that you are going to put the stamp of firm authority on this Committee early on, and I will not transgress again.
 The Minister has obviously made a number of interesting suggestions, and has given us some grounds for comfort. In the light of what he has said, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Henry Bellingham: I have one particular concern. I should like to refer the Minister to proposed new paragraph 19C(5) to schedule A1 to the Trade Union and Labour Relations (Consolidation) Act 1992, which says:
 ''The initial period is the period starting with the day on which the CAC informs the parties under sub-paragraph (7)(b) and ending with the first day on which any of the following occurs''. 
Proposed new paragraph 19C(5)(d) says: 
''the CAC informs the union (or unions) under paragraph 25(9) of the name of the person appointed to conduct the ballot.'' 
The union's right of communication continues throughout the period of the ballot by virtue of existing provisions in the schedule, so is not proposed new paragraph 19C(5)(d) superfluous? In the interests of trying to tighten up and sharpen up legislation, which I am sure, Mr Forth, is something that you would sympathise with and condone, surely we should take out anything that is not strictly necessary. Will the Minister please comment on that?

Gerry Sutcliffe: The hon. Member may be right as regards the proposed new paragraph. There may be some truth in what he is saying. I will take it away and look at it.

Henry Bellingham: I am grateful.

Jonathan Djanogly: I thought that it was important to speak in this stand part debate because, unlike most of the other clauses, which build on existing legislation, clause 5 is new. There is a new right for unions to
 communicate with workers after acceptance by the CAC of an application, but before the ballot process. My initial reaction on reading the clause was, ''Why is it needed? Let us table an amendment to strike it out.'' The Minister will notice that we did not table such an amendment, but we have not yet covered why the clause is necessary. It would be helpful if the Minister explained some of the background to that and said which representations led him to think that it should be included.

Jon Cruddas: I just want to flesh out a couple of points that the Minister has made and raise a couple of points on which I seek a bit of clarity. The balloting period is relatively short but the recognition procedure can be quite protracted. That is the product of the agreements that were reached during work on the ''Fairness At Work'' White Paper, which were consolidated in the Bill.
 The current code of access concerns the statutory 20-day period of the recognition procedure. However, the Minister talked about the possibility of a code of practice for the recognition procedure, addressing intimidation on the part of the union or the employer, covering access in excess of the 20-day period of the statutory recognition ballot. 
 As I understand it, the clause proposes access for the union only in terms of direct communication with the union members; it does not cover issues of access beyond that formal direct communication. Can the Minister clarify what he anticipates in terms of a new code of practice—covering, one would hope, the whole recognition procedure rather than the 20 days in the current code—and what that would mean in respect of addressing intimidation short of dismissal? 
 The hon. Member for Huntingdon mentioned remedies that were available in terms of unfair dismissal, but this covers issues of which the Department is aware, thanks to the submissions that were made to it during the review of the legislation, such as action that is short of a dismissal but which intimidates prospective union members as well as current union members, who might support a vote for the union in a recognition ballot. That covers a range of activities short of dismissal—visits to the homes of employees, activities outside the gate and the like; there is a range of possible intimidatory tactics. Does the Minister anticipate that the revised code, or discussions around it, will cover a period that exceeds the 20-day period of the formal statutory recognition ballot?

Gerry Sutcliffe: I am considering the situation on the basis of the evidence—not only the 20 days, but the whole process. It is difficult to find the right solution. We are considering the matter and will come back to the Committee at an appropriate time. My hon. Friend is right to differentiate between the balloting period and the period of recognition.
 The reason behind the clause is to create a balance. The basis of the debates has been that the statutory recognition procedure should work well. We have had evidence of that from the extensive consultation that has taken place with a variety of organisations. We 
 listened to the union argument that the employer had the right to speak to his or her employees at will, and that those within the work force who did not want to join the union had their opportunity. There was a need for the union to be involved at an earlier stage, and for that to be done independently through the CAC and qualified independent people.

Jonathan Djanogly: There is a fundamental difference. The employee has contracted to work and provide services for the company, and might join the union. However, the employees who have not joined the union have no relationship with it. How can we, therefore, give the company and the union parity in terms of approach?

Gerry Sutcliffe: The union will have had to recruit members and must be in a position to explain to the CAC that it has reached the cut-off point for the number of members recruited. It will have tried the voluntary route, and that will not have worked. It will then have gone on to the statutory procedure. Surely it is important, in a democracy, that people should get the maximum amount of information that is available from all parties concerned, so that they can make a balanced judgment about what they want.
 We took cognisance of the force of the arguments put to us by unions, and the clause provides the arrangements for access. This is about modern industrial relations. The system is working well and we do not want to see intimidation on either side. There is no extra cost to the employer because the union covers the cost of the communications that go to the CAC through the independent person. It is right and fair that we strike a balance. I know that Opposition Members do not accept that for reasons that have been explained in the debate. I believe that this is the right way forward. 
 Question put and agreed to. 
 Clause 5 ordered to stand part of the Bill.

Clause 6 - Power of the CAC to extend notification period

Question proposed, That the clause stand part of the Bill.

Henry Bellingham: We have not tabled any amendments to the clause, which seems to be fairly straightforward. There is one point on which I would like the Minister to elaborate. The clause gives the CAC power to extend the notification period, amends paragraph 24 of schedule A1 and applies where the CAC gives notice under paragraph 22(3) or paragraph 23(2) that it intends to arrange for the holding of a secret ballot. Can the Minister give us some more details about that?

Gerry Sutcliffe: I am happy to do that and thank the hon. Gentleman for making the point. The statutory procedure was designed to encourage voluntary deals
 wherever possible and to act as a fallback where the parties cannot reach agreement. That has worked well with over 700 voluntary agreements since the legislation came into force. If the CAC decides to hold a recognition ballot, there are 10 working days for the parties to inform the CAC that they do not wish the ballot to go ahead. That gives the parties time to consider whether they want to go to the expense of holding a ballot. They may choose to withdraw, often because they have been able to reach a voluntary agreement.
 Unlike most time periods in the process, the 10-day period cannot currently be extended by the CAC and the parties have no means of asking the CAC to delay the ballot for even a little while longer while they try to reach agreement. Of course, the parties could still call a halt to the ballot after the end of the period, but any agreement reached after that date would not qualify as an agreement for recognition under the schedule. That would mean that the three-year moratorium on the employer terminating the agreement did not apply. The parties would not be able to seek the assistance of the CAC in determining their bargaining method or addressing their failure to adhere to the agreed bargaining method. Where both sides agree, the clause, by extending the deadline, gives them an opportunity to reach a voluntary arrangement. 
 Question put and agreed to. 
 Clause 6 ordered to stand part of the Bill.

Clause 7 - Postal votes for workers absent from ballot at workplace

Question proposed, That the clause stand part of the Bill.

Henry Bellingham: I have a small point to make. The clause makes it clear that the CAC may not decide that the ballot is to be conducted by a combination of postal and workplace voting unless special factors apply. What sort of factors are we talking about? What does the Minister have in mind here?

Gerry Sutcliffe: I am grateful to the hon. Gentleman for raising that issue. When the CAC calls a ballot, it must decide what method of voting should be used. It may choose between a postal ballot and a ballot held in the workplace. In certain circumstances where special factors apply, the CAC can decide that the ballot should be conducted by a combination of those two methods. In a postal ballot, the voting paper is sent to a worker's home address and he or she has a couple of weeks to return the vote to the balloting organisation. In contrast, a workplace ballot takes place on one or perhaps two designated days and workers must vote in person. The clause aims to ensure that no worker who has to vote at the workplace is prevented from voting because he or she is absent on the day of the ballot.
 Currently, the law is inflexible. If the CAC decides that there should be a workplace ballot or a combination ballot with workplace voting, every worker who wishes to vote must do so in person at his 
 or her place of work on a single day. That means that workers who are off sick, on holiday or have taken other approved leave on the day of the ballot forfeit the opportunity to cast their vote. Every vote counts—I have said that on many occasions—and that is especially so when the outcome is subject to a minimum number voting in favour of recognition. 
 Clearly, it is undesirable for workers to miss out on the opportunity to vote on the important question of whether they should be represented by a union in collective bargaining, especially if they are unavoidably absent because they are on maternity or paternity leave, they are a magistrate sitting on the day of the ballot, or for any other good reason. The clause corrects the anomaly while allowing the CAC to arrange for a postal ballot for such workers. I am sure that the Committee will agree that it is a sensible and desirable measure.

Jonathan Djanogly: I support the idea that ballots should be conducted entirely by post. The CAC annual report states:
 ''115 cases have now progressed to the balloting stage and 58 ballots have taken place. Of the ballots that have been concluded, 35 resulted in a majority voting in favour of recognition and in 23 the union failed to reach the required majority. The CAC has now commissioned 36 postal ballots, seven workplace ballots and 15 involving a combination of the two methods, most often a workplace ballot with the provision of a postal vote for those workers absent from the workplace on the day of the ballot.'' 
If any hon. Member thinks that I am quoting the report as a ploy to help the companies, I can assure them that that is not the case. The report continues: 
 ''Postal ballots have nevertheless tended to provide the highest proportion of votes in favour of recognition.'' 
Despite that, I think that postal ballots should be in place in every circumstance. Things are moving that way, but I cannot understand why there are still any workplace ballots. If there will still be workplace ballots, will the Minister advise us as to whether there are regulations to deal with how those ballot are carried out?

Gerry Sutcliffe: The answer goes back to the earlier point about the test that someone must pass to become a qualified independent person to run and to access ballots. Employees of the companies that I mentioned have all passed that test.
 The hon. Gentleman clearly has a strong view on whether there should be workplace or postal ballots. I think that the CAC should attend to the issue in the context of the particular industry, the relationship between the trade union and employer, and what normal practice has been in that sector. The CAC has the power to examine that, but it does not have the power to have a combination of the two voting systems. Surely the hon. Gentleman does not want people to be prevented from voting through no fault of their own.

Jonathan Djanogly: Even if a workplace ballot is used, why should voters not have the right to demand a postal ballot if they so wish? The legislation provides that, if they are sick or so on, they can use a postal
 ballot, but why should they not have the right to demand one in any event? The law has been changed on parliamentary or local government ballots: if someone wants a postal ballot, they can have one. Why should workers not have the same right?

Gerry Sutcliffe: They have the right if the CAC determines that to be the appropriate way to proceed through representations from the employer, trade union or individual. The CAC has that power. The difficulty with the old legislation was that it did not have the power to ensure that everyone was included, because the method of voting had to be one or the other. We are saying that a combination of the two is a fairer approach.
 Question put and agreed to. 
 Clause 7 ordered to stand part of the Bill. 
 Clause 8 ordered to stand part of the Bill.

Clause 9 - Employer's notice to end bargaining arrangements

Henry Bellingham: I beg to move amendment No. 34, in
clause 9, page 9, line 11, after '(2)', insert ',(2A)'.

Eric Forth: With this it will be convenient to discuss the following:
 Amendment No. 35, in 
clause 9, page 9, line 14, at end insert— 
 '(2A) In sub-paragraph (3)(d), leave out ''5'' and insert ''14''.'.

Henry Bellingham: Clause 9 deals with the employer's notice to end bargaining arrangements. That notice may be given if the employer believes that he, with any associated employer, employed an average of fewer than 21 workers in any period of 13 weeks, and if three years have passed since the CAC awarded recognition. The CAC must decide if such notice complies with the requirements of paragraph 99(3) of schedule A1 to the Trade Union and Labour Relations (Consolidation) Act 1992. The requirements are that the notice
''(a) identifies the bargaining arrangements, 
 (b) specifies the period of 13 weeks in question, 
 (c) states the date on which notice is given'' 
and—this is the requirement relevant to the amendment— 
''(d) is given within the period of 5 working days starting with the day after the last day of the specified period of 13 weeks.'' 
We are saying that 14 should be inserted instead of five. 
 We are discussing small and medium-sized enterprises—for example, companies employing slightly more than 21 employees, or small manufacturing plants that we all visit in our constituencies, where the owner-manager is often under enormous pressure and strain and is reeling under the burden of substantial extra regulations on the business. The Federation of Small Businesses 
 recently said that most owner-managers spend at least 10 hours a week dealing with regulation and burdensome business. 
 Given those circumstances, and in the interests of making life easier—not trying in any way to stop unions and union members from enjoying their rights—we are considering the interests of small and medium-sized enterprises, and would like to substitute five working days for 14 working days. That is a reasonable request and I hope that the Minister will consider it. We have not had any success yet, although we have had a few nods and winks from him suggesting that he will reconsider some of our suggestions. I think that this is a reasonable and sensible suggestion and I hope that he will accept it.

Jonathan Djanogly: Clause 9 is a series of new provisions that tighten the existing ratchet in favour of the unions, generally against the interests of the company. Amendment No. 35 is a small proposed change. I am not sure whether the Minister has yet found the information that I requested this morning dealing with sizes of companies compared with the number of applications. [Interruption.]. I am pleased to see that he has, which is marvellous. I do not have time to study it on my feet but I shall do so later because I am sure that it will be mentioned again.
 If a significant company has a significant human resources department, it will be used to dealing with the unions. It will be used to and well advised on union procedures. In that case, five days might be adequate. However, for smaller companies, such as that mentioned by my hon. Friend the Member for North-West Norfolk, which have 21 staff, five days is a very short time in which to comply with the procedure, and will effectively block their rights to organised derecognition. 
 We must return to the basic principle that, if a company has fewer than 21 employees, it does not have to have recognition. This amendment would adapt that principle. We shall come on to the three-year rule, but we are talking here about five days to make notification after the 13-week period. An average small company, without a human resources department or knowledge of union law, will probably be massively disadvantaged and outgunned by the union's huge administrative and legal representation. The provision acts as a block to companies putting derecognition in place if staff numbers drop below 21. Fourteen days would go a little way—not very far, as it is a modest proposal—towards addressing that imbalance.

Gerry Sutcliffe: I appreciate the spirit in which the amendments have been tabled, but I am always concerned when someone says, ''Help me a little; I am trying to help you.'' Amendments Nos. 34 and 35 are closely linked and would ensure a change to the time limit in the statutory procedure. That time limit is in paragraph 99 of schedule A1 to the 1992 Act, which deals with an employer wishing to derecognise the union or unions because employment has fallen below 21 workers.
 The process begins with the employer issuing a notice to the union or unions concerned and copying it to the CAC. The notice must contain various pieces of information and specify the 13-week period when employment was on average fewer than 21 workers. The notice must be issued within five working days of the end of that period. The amendment would extend that period from five to 14 working days. It is possible that the hon. Member for North-West Norfolk was thinking in terms of calendar days, rather than working days, when he tabled the amendment, but the overall intention is to give more time to the employer to issue the notice. 
 I am far from convinced that that extra time is needed. Generally speaking, we are addressing a situation in which employment is falling from a point where 21 or more workers are employed to one where employment is below 21. That could be a short-lived phenomenon, but it is more likely to be longer lasting or even permanent. If so, a little slippage in the reference period should not severely affect the calculation. 
 For example, if an employer for some reason could not get the notice out in time for a reference period ending on March 1, he could always issue a slightly reworded notice the day after in respect of a reference period ending on March 2. In other words, it is unlikely that he would lose his ability to derecognise if a problem about the notice ever arose. 
 I see no obvious reason why the employer will not be able to issue the notice on time in virtually all situations. Most bargaining units are small, and we are not talking about intricate calculations. We do not agree with the case to increase the notice period from what will often be one working week to nearly three working weeks. Despite the hon. Gentleman's plea, I ask him to withdraw the amendment.

Henry Bellingham: The Minister is convincing in his inimitable, charming way, but I do not agree about how easy it will be for an employer to reissue another notice if he does not complete the paperwork and forms in the five days. We are talking about another burden on businesses, particular SMEs, and we will continue to remind the Minister of that. However, in the light of his remarks, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Henry Bellingham: I beg to move amendment No. 25, in
clause 9, page 9, line 20, leave out '3 years' and insert 'six months'.

Eric Forth: With this it will be convenient to discuss the following:
 Amendment No. 26, in 
clause 9, page 10, line 5, at end insert 
 ', and leave out ''3 years'' and insert ''six months''.'.

Henry Bellingham: These two amendments are important. I remind the Committee that the employer may apply for a notice to end bargaining arrangements three years after the arrangements are put in place. We must also bear it in mind that clause 9 provides that
 any unsuccessful application or notice to derecognise the union by the employer or a worker renders any further such applications inadmissible for three years. That means that the period could last six years.
 I want to reflect on a point made by my hon. Friend the Member for Huntingdon. The key to this part of the Bill is the 21-employee limit. I do not want to repeat what was said on Second Reading, but the Conservatives praised the Government for keeping to the 21-employee limit. Small firms are often under pressure, and their priority should be to expand, so it is fair that they are exempted from the measures. 
 Surely the principle is that, once the number of employees falls below 21, the employer should have the right to end bargaining arrangements if he so desires. The arrangements may be working well. Relations between the employees and owner-manager or plant manager may be harmonious and the union may be surpassing expectations and doing an excellent job of collective bargaining and representing the employees. It may be a happy situation all round, and the employer may see no need to issue such a notice.However, if the employer wants to issue the notice, it would be unfair for him to have to wait for three years. That is a point of principle, which I hope that the Liberal Democrats and other Opposition parties will support. If it is right and proper that firms employing fewer than 21 people are exempt, it is wrong to ask them, whether they be individual companies or subsidiaries of a large company, to wait three years.

Michael Jabez Foster: I am grateful to the hon. Gentleman for giving way, because I was interested to find out his view on how he would deal with a situation in which the numbers were on the cusp—perhaps 22 on one day and 19 the next. That is not unusual, particularly in industries such as tourism, where the labour force fluctuates all the time. How would he deal with that situation, without disadvantaging those who sought to be members of a union but happened to be working off-season at a given time?

Henry Bellingham: That is a fair point. However, I believe that six months, rather than three years, is a reasonable period. Three years is a long time. If the Minister said that he was prepared to consider the amendment and to reach a compromise of perhaps a year and a half, we might be more satisfied. That would answer the point made by the hon. Gentleman about seasonal businesses in which the numbers go up in the summer, or in the winter in some cases. For example, in a packing plant in East Anglia, the number of employees might increase in the winter, because they are dealing with potato packing or carrot topping.
 We feel strongly about the matter. If the principle has been established that smaller companies should be treated differently, they should not be discriminated against through the clause preventing them from going through the process for a period of three years. In fact, the period could be up to six years because, as I pointed out earlier, the clause provides that any unsuccessful application or notice to derecognise the union by the 
 employer renders any further such applications inadmissible for three years. The period could be extended to five or six years, and in the meantime the company's staff numbers may have decreased to nine or 10. We are discussing giving small companies—micro-businesses—the right to manage their business and to run their affairs without undue interference or burdens.

Gerry Sutcliffe: The hon. Gentleman tempts me to act, but not enough. We need to address the point about burdens on business. I hear that charge on many occasions from Opposition Members. Will the hon. Gentleman write to me listing the particular burdens on business that he considers to be a problem in employment relations terms? When we tried to raise the before in questions and debate, the Opposition gave no detail about which employment rights and regulations they did not want. I offer that challenge to the hon. Gentleman and, in the course of our consideration of the Bill, I am sure that he will write to me with details.

Peter Atkinson: The Minister raised that question in the debate on Second Reading. I am sure that all members of the Committee and, no doubt, all Members of Parliament, visit small businesses in their constituencies from time to time. All those businesses make representations about the burden of red tape. It is not individual items of red tape but its proportionality that worries them.
 We do not want to abolish the Health and Safety at Work, etc. Act 1974, but businesses complain that that Act is applied disproportionately hard in relation to certain firms. It would be difficult for us to list all those things, because the question is one of proportionality. I would not have thought that we needed to tell the Minister that, because he should already know it.

Gerry Sutcliffe: The hon. Gentleman makes a good point, and has started making the list—no health and safety legislation.

Peter Atkinson: I said—Hansard will have reported it—that we do not want to abolish the Health and Safety at Work, etc. Act 1974, but that companies complain about the way in which it is enforced.

Gerry Sutcliffe: I understand what the hon. Gentleman says. I know that he has spoken in the House in favour of a number of issues concerned with employment rights. However, I made the general point that we are told that there is a big burden on business and that what we are trying to achieve will weaken its position.

Hywel Williams: The Minister will know that the TUC has drafted a simplified procedure for recognition in small businesses, which would go a long way towards placating the concerns expressed by the hon. Member for Hexham (Mr. Atkinson) about cost and complexity. I commend such procedures and I hope that he will, too.

Gerry Sutcliffe: I am grateful to the hon. Gentleman for making that point. The business case for many of the provisions is sometimes missed, in that there is a general view that they are a massive burden on business. However, given the demographic changes that are taking place and issues about skills and work force retention, most good employers recognise that some of the employment rights and regulations benefit them as employers and help their businesses. I recently attended the awards for parents at work, at which the business case for flexible working and the work-life balance was made. We heard how productivity and the bottom line had increased on the basis of the flexible working arrangements that the Government introduced.

Malcolm Bruce: I have some sympathy with the amendment, but the Minister is arguing his case. The hon. Member for Hastings and Rye (Mr. Foster) made a point about businesses that are on the cusp. I am slightly concerned at the idea that a business with 22, 23 or 24 employees that has agreed to union recognition, but then drops to 19 or 20 employees will be more concerned about derecognising the union than managing the business. If the legislation works, as it does in most cases, a business will be helpful and co-operate with the union, rather than moving to derecognise it at a time when the business is clearly vulnerable. I would be slightly worried about a business that regarded derecognising the union as the most important matter that it had to address in such a situation.

Gerry Sutcliffe: I thank the hon. Gentleman, who has made the point forcefully that it would be disconcerting if derecognising the union were the main focus of a company whose number of employees had gone below 21. The hon. Member for North-West Norfolk helpfully raised the issue on Second Reading and will know the concern felt by Government Members about companies with fewer than 21 employees. That is why I do not want to give in on the amendments. Both would shorten the period of debarment from three years to just six months. They would mean that, if the employer failed in an attempt to derecognise a union under the statutory procedure, he or she could try again after there had been recognition for a minimum of six months, rather than three years. That would be destabilising. With the Bill, we are trying to achieve stability and to look to the future, not the past, as I say at every opportunity.

Peter Atkinson: The Minister gives me an opportunity to make a slightly oblique point. The assumption in the debate so far is that the employer will wish to derecognise the union. However, the employees could wish to derecognise the union, for various reasons. Perhaps they want to choose a different union. They could do so only by asking the employer to go through the process of derecognition. The long period for which the Bill provides may not be satisfactory for the employees of the company who want to change the union much more quickly.

Gerry Sutcliffe: The employees could still do so under the provisions. They could also stop paying their subscriptions and withdraw from membership of the union. I think that that is how they would deal with the situation.

Peter Atkinson: If the employees wished to change to a different union, that would be a different situation, because the recognition agreement would, I assume, be with the previous union—the one that the employees wish to leave.

Gerry Sutcliffe: The whole process would have to start again, with fresh recruitment by the other union. From memory, I think that there have been issues within the TUC about inter-union situations, but the employees could withdraw from membership and there would not be a problem in that respect.
 This is about maintaining trust. We think that the provision safeguards companies with fewer than 21 employees that want to give the notice. To change the three-year process would create further inequalities.

Jim Sheridan: Will my hon. Friend the Minister clarify exactly what a bargaining unit is? An unscrupulous employer—I have yet to meet one—could split the company up, so that there were fewer than 21 employees in order to circumvent employment legislation, as has happened in the transport industry. What situation would that create and what is the definition of a bargaining unit?

Gerry Sutcliffe: There would be an application from the union to the CAC about its definition of a bargaining unit. The discussion would at that stage be with the employer about the bargaining unit and the appropriateness. If the circumstances that my hon. Friend mentioned arose, the union would be able to complain to the CAC about the procedure and take the matter further. However, that is against the spirit of the legislation and I hope that such circumstances would not arise. Although I recognise the hon. Member for North-West Norfolk's strength of feeling on the issue, I ask him to withdraw the amendment. If he does not, I ask my hon. Friends to vote against it.

Jonathan Djanogly: I back up the incisive point that my hon. Friend the Member for Hexham made. I am not entirely sure that the Minister addressed my hon. Friend's point with the seriousness that it deserves, so I should appreciate it if he addressed it again. If workers do not want to have the union, perhaps either because they want to switch to another union or because they simply do not want the recognition agreement, why should they have to rely on the company for their derecognition? There may be a straightforward answer to that question, but I should be grateful if the Minister addressed it.
 The three-year rule cements union rights no matter how low the number of employees goes. We suggest that the time limit be reduced from three years to six months. I accept that unions have a problem under the existing legislation in so far as they cannot put their views to the CAC against derecognition if the issue has come up in the past. I see no reason why the Bill should 
 not address that, although I note that the CAC annual report says that only one such case has been considered, so it is not as though what I describe happens every day of the week. However, instead of giving a fair balance to unions, the clause is reversing that situation. Unions are to get the representation rights that they wanted, but companies are to be far more restricted in making applications than they used to be.

Jon Cruddas: Does the hon. Gentleman accept that, through the forging of the legislation, a balance has been struck on all those elements? As the legislation is currently constituted—it has not changed—the union must wait to make another recognition proposal to the CAC for three years in the advent of a failed procedure. That three years is equivalent to the three years on the other side, to which the hon. Gentleman has alluded.

Jonathan Djanogly: That is not my reading of the Bill, although I may be wrong and would be grateful if the Minister addressed that.
 The Minister said that he would not want the company to reapply every six months, but we know for a fact that that problem does not arise often in practice. We should also recognise that, for the most part, such circumstances will become an issue only if the company is doing badly. Companies normally do not like to get rid of staff simply to reduce the number to fewer than 21. If the number of workers falls below 21, it is likely that the company is having a hard time and looking to save itself. The flexibility that is provided for elsewhere is going to be restricted. 
 I return to the principle that my hon. Friend the Member for North-West Norfolk and I have maintained, which is that if the number of employees falls below 21, it should be possible to go for derecognition. Again, the provisions will restrict that. I get the feeling that the draftsman got a bit carried away on the clause, because it does not seem to recognise the reality of companies that face such difficulties. 
 I have had a quick look at the figures provided by the Minister. As I thought, only 15 per cent. of recognition applications are for companies with fewer than 50 employees. That probably has as much to do with unions not being bothered to recruit in smaller companies as it does with companies not wanting unions. That works both ways, but reinforces the point that one-size-fits-all legislation is not appropriate. There should be more tailored legislation, which should treat smaller companies differently from larger ones. For that reason—to do with the correct figure of six months—it would be worth while for the Minister to look again and perhaps bringing the matter back later.

Jim Sheridan: All that goes back to the point the hon. Member for Gordon (Malcolm Bruce) made. If a company's number of employees falls to fewer than 21, it is not necessarily the direct result of people wishing to join a trade union. Three years is an adequate period
 to allow a partnership relationship to bed in, and the hon. Gentleman is himself an example, in that his constituents have four or five years to make a judgement on him.

Jonathan Djanogly: It depends on the circumstances. If a company is incorporated, if people invest in it and it rapidly builds up members, if it is based on an idea and that idea does not work, the company can go downhill as rapidly as it had meant to go uphill. Circumstances dictate. In the Bill, however, there is no room for manoeuvre. It is fixed and static, and it creates rights that are not relevant to the size of the company or adaptable to circumstances.

Gerry Sutcliffe: The hon. Member for Huntingdon makes his case and has his beliefs. He is wrong when he says that the Bill is one size to fit all. One criticism from some of my hon. Friends is that it would be better if it were. The threshold of fewer than 21 is quite clear, and points are made about numbers below 50. That is a matter for trade unions and how they set about their business, not a matter for the Government. The whole process would be devalued if it were. We are building on the success of arrangements so far and should not start to chop and change the period of debarment. The three years runs, as my hon. Friend the Member for Dagenham pointed out, from the period of negotiation by which we got to the Employment Relations Act 1999. I think it is entirely appropriate. It would be destabilising if we went back to six months.
 The hon. Member for Huntingdon made the point raised by the hon. Member for Gordon, that recognition would not be the priority for a company going down to fewer than 21 employees. The hon. Gentleman pointed out that that would probably be because the company was going through hard times and having to shed labour. It would be concentrating on the issues around that.

Jonathan Djanogly: Can the Minister quantify or describe why the arrangements have been a success so far?

Gerry Sutcliffe: I can say so from the general attitude in consultation on the 1999 Act from the organisations we have spoken to about how the legislation has worked. People—not all people—in the full consultation exercise accept the appropriateness of the cut-off point for under-21s, but there is the issue around recognition on the cusp, at just above 21 employees. It is a balanced position. The amendment brings in a new six month-period, which we have not discussed or consulted on, and which would set the process back.

Jon Cruddas: Does my hon. Friend concede that if the three-year threshold is moved down to six months, the moratorium of three years on a new trade union proposal for recognition within that bargaining unit could itself, conversely, be reduced to six months? If we reduce the thresholds from three years to six months, there will be consequential effects across some other elements of the package that was forged in 1999.

Gerry Sutcliffe: My hon. Friend makes the case clearly about how we got to where we are. It would be difficult and unproductive to change things.
 The hon. Member for Hexham talked about how people working in companies with fewer than 21 employees who are unhappy with their union could get out of the recognition agreement if they wanted to join another union. In addition to not paying their subs and leaving the union of their own volition, they could follow a procedure in which 10 per cent. of the employees could apply to the CAC for derecognition. 
 My hon. Friend the Member for West Renfrewshire (Jim Sheridan) spoke about companies that would cut their work force to fewer than 21 to try to get round the legislation. In relation to the union's application to the CAC and the bargaining unit, the threshold would apply to the employer and any associated employees, which is how that problem could be dealt with. 
 I accept the strength of feeling of Opposition Members, but we do not agree. I ask the hon. Member for North-West Norfolk to withdraw the amendment. If he is unwilling to do so, I will ask my hon. Friends to vote against it.

Henry Bellingham: The amendment contains an important principle, so we will press it to a vote.

Malcolm Bruce: Although my intervention made this clear, I think that the debate was a perfectly good one to have. I say that while supporting the Government on the 21 level, as I believe that that exemption is still necessary. We seem to have got into a nitpicking argument about how to deregister in a cusp situation, which is not constructive. If the Opposition press the amendment to a Division, I shall not support them.
 Question put, That the amendment be made:—
The Committee divided: Ayes 3, Noes 12.

Question accordingly negatived.

Henry Bellingham: I beg to move amendment No. 27, in
clause 9, page 9, line 29, at end insert—
'(3) As soon as there are fewer than 10 workers employed in a company, the employer can end all bargaining arrangements at any time at 35 days' notice.'.
 The amendment simply reinforces the point that we made earlier about companies whose number of employees decreases quite substantially. It makes it clear that as soon as fewer than 10 employees are 
 employed in a company, the employer should be able to end all bargaining arrangements at any time at 35 days' notice. That makes a great deal of sense, because we are talking not about numbers falling to 18, 19 or 15; that is, we are not talking about companies that are on the cusp. They may be seasonal businesses whose numbers fluctuate at different times of the year. We are talking about the halving of a work force, in the case of a company that is employing only 22 or 23 people. 
 According to the note that we received at 2.30 pm, many companies that will go through the recognition procedure will be employing 21 to 30 people. They account for 4.7 per cent. of companies. The biggest percentage—25 per cent.—employ 500 or more people. Very few companies would be affected, but it could be absolutely vital to them. When a company's staff levels are as low as 10, surely they do not want the burden of any extra administrative hardship or pressure. The amendment seeks to relieve such pressure on small companies and businesses. 
 The Government keep stressing their small business credentials and claim they are very proud of what they are doing for small businesses. The Minister for Small Business and Enterprise and I share a common agenda of trying to aid wealth creation and the vital role of business in our economy. He and I have shared a platform many times up and down the country talking about this issue, and I know he believes that small businesses are the lifeblood of the economy. Such businesses are absolutely crucial to our future, particularly in areas such as hi-tech, as well as in regenerating various parts of the inner cities. 
 The amendment is reasonable and very pro-small firm, makes a great deal of sense and will affect few companies. I remind the Committee that, according to the CAC caseload statistics, the percentage of applications from companies employing under 21 workers was 0.4 per cent., while last year there were just five cases where a ballot was held in companies with a bargaining unit of 25 workers or fewer. The vast majority of those cases concern companies with many more employees, so this amendment will affect only a small number of companies, to whom it will nevertheless be very important. I urge the amendment on the Committee.

Jonathan Djanogly: Earlier, I referred to the Government's figures and said that under 50 workers, the figure was 15 per cent. I am sorry to say that I made a mistake—the figure was actually 11 per cent. That reinforces my hon. Friend's point that, when it comes to unions applying for recognition, they do not seem to be very interested if there are fewer than 50 workers.
 Going back to the legislation, I think it entirely appropriate that if there are fewer than 10 workers, employers should be able to go for derecognition. Other than that, I merely reinforce the points made by my hon. Friend.

Michael Jabez Foster: There is a great difference between seeking recognition and being removed from recognition. The starting point, surely, is the principle that all workers should have the right to be represented by a union—but that view is the difference between our
 two sides. There is a practical problem for small companies in setting up the machinery, dealing with the cost and conducting all the procedures necessary to enable individuals to be represented by a union. For that reason, I think the 21 target threshold for moving into recognition procedure is reasonable.
 Unfortunately some hon. Members on the Conservative side seek to remove the union possibility at every opportunity. Yet, when it comes to moving out of recognition procedure, unless one does so as a matter of principle, what is the saving to the employer company in moving out of a system that may have been working well? That is particularly relevant at a time that may be difficult for the company—not because of the union, but perhaps because it is losing staff. Surely that is the point when the workers would find the use of the union most helpful—for example, in negotiating redundancies. I venture to say that employers would find it more useful to deal with a recognised negotiating body than with individuals. Of course the amendment allows the employer to make a choice in such a situation on 35 days' notice. As a principle, it depends at what end one is looking at. Therefore, while I support the 21 as a starting point, when one comes in the other direction, that figure does not have quite the advantages that the amendment may suggest.

Jim Sheridan: Following on from what my good friend has just said, it is unfortunate that the hon. Member for Huntingdon has left, but I would encourage him to break out of this negativity and to take a leap into the dark. Can I share my experience of working in industry? Small and medium enterprises are the lifeblood of the country and we must do everything we can to support them. They aspire to be big companies. Some of the more successful large companies that have had to downsize have done it with the assistance and partnership of trade unions. I see the matter from the point of view of someone who has walked the walk and talked the talk. There is nothing to fear from being members of a trade union. I suggest only that we look at some of the major employers and successful companies in this country, most of which, if not all, have recognised trade unions on their premises.

Malcolm Bruce: Conservative Members are persisting with the theme of the previous amendment. At no time have they given us any practical examples of where the problem has arisen. I might be more prepared to engage in the debate if they could give us examples of companies that were inconvenienced and disadvantaged by the measure. If they could, perhaps we would take it seriously. I fear that the Conservatives, having looked for ways to reduce union recognition in the Bill, have decided to take a cut-off point.
 That is a pity because there is a cross-Committee agreement, which the hon. Member for Hastings and Rye has just articulated. We understand the problems of small businesses and the difficulty of dealing with unions. Most of us accept that the 21 threshold is desirable. When one comes from the other direction, 
 one is talking about a company that has been through the process, has had union recognition and has worked within the framework of that union. I should have thought that in most cases it is not the union that is the problem, but the marketplace. 
 The reports we get are that the mechanism has worked on the whole. It can help the company to deal with these difficult problems. It may even be that, by introducing an extraneous issue about a trade union, one compromises the sense of solidarity—if I can use that expression—between management and their work force in dealing with an external problem. It behoves hon. Members who support the amendments to give some practical examples.

Peter Atkinson: I do not propose to give individual examples; I do not know of any. Representations that we have had from various employers' organisations, the CBI and others have expressed concerns about the matter and those are the concerns that we are quite properly articulating.

Malcolm Bruce: I do not complain about hon. Members articulating them. We are having a debate in Committee and they are perfectly proper issues to bring forward. I have also consulted various employers' organisations and I have not detected a real angst about the issue. They have some concerns. The same applies to red tape. My party and the Conservative party are actively looking for areas of regulation that could be done away with or simplified. Whenever businesses tell me that they are overburdened with regulations, I say, ''You are hitting at an open door. Tell us what it is and if we can work with them we will.'' We have published some proposals. More often than not when one gets down to it, they are most concerned about tax complications rather than individual regulations. There are regulations that could be simplified or abolished. That is fine but, in this case, without substantive evidence that there is a real practical problem, I am not persuaded.

Jonathan Djanogly: The point was made before, but it is worth reiterating, that there have only ever been five cases where the size of the bargaining unit has been zero to 25, so the hon. Gentleman is not going to find many examples of companies dropping below 21 and, if he does, they will be companies on the way out.

Malcolm Bruce: I think in a way that the hon. Gentleman makes my point, which is why we should terminate the debate. Otherwise, it is in danger of becoming a large sledgehammer to crack a possibly non-existent nut.

Gerry Sutcliffe: In solidarity with the hon. Member for Gordon, he has hit the nail on the head—or the nut with the sledgehammer.
 All the points about small businesses are well made, and I am grateful to my hon. Friends the hon. Members for Hastings and Rye and for West Renfrewshire for their explanations. As I said, small businesses are the lifeblood of the UK and the Government are clear about the impact of 
 employment regulations. That is why we have introduced an annual statement on those regulations and why the Department of Trade and Industry leads across government in terms of the Better Regulation Task Force, which considers unnecessary legislation that is no longer appropriate to small businesses and other organisations. 
 My hon. Friend the Member for West Renfrewshire makes a point about trade union involvement. I, like him, was involved in a previous life in negotiating downsizing. That was one of the unfortunate effects of the stewardship of the last Conservative Government. There was downsizing in a range of companies in the printing industry. Companies of that size have nothing to fear. Ninety-five of the top 100 companies listed on the stock market have trade union agreements and are trade union organised. Trade unions can be a force for good. I know that the hon. Member for North-West Norfolk says that he believes that trade unions are not bad; I am not sure that that view is shared by the hon. Member for Huntingdon, after the way in which he has outlined his position today. The hon. Member for Gordon is right that this amendment is unnecessary. It would add further burdens to business. It is also technically deficient as it refers to companies rather than employers. On the matter of technicalities alone, we should not be able to accept it, because the term ''company'' is not used elsewhere in the statutory procedure. That is a trivial point concerning the drafting of the amendment but, returning to the theme of derecognition, we do not think that it is a tool that needs to be used. The statutory procedures give people the opportunity to derecognise where appropriate, so I ask the hon. Member for North-West Norfolk to withdraw the amendment.

Henry Bellingham: The Minister has again been courteous and logical in his argument. We shall come back to the issue later because we feel strongly about it. I accept that there are some technical deficiencies in the amendment, but the principle is important. If the hon. Member for Gordon had read the representations from people such as the Engineering Employers Federation, the CBI, the Institute of Directors and British Chambers of Commerce, he would be aware of their concerns about the matter.

Gerry Sutcliffe: On that point, I must correct the hon. Gentleman. I do not think that those organisations mention companies with fewer than 10 staff. Their point concerns the Government's position on companies with fewer than 21 staff. I have not seen in any correspondence or heard in meetings with the organisations that the hon. Gentleman mentions any reference to companies of fewer than 10 staff.

Henry Bellingham: I do not want to betray any confidences, but we have talked to those organisations and have gone through the Bill clause by clause with
 them. They expressed various concerns to us, but we shall return to this later. Bearing that in mind, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Appeals against demands for costs

Question proposed, That the clause stand part of the Bill.

Henry Bellingham: I want to raise a point that is more of a question. On page 10 of the Bill, new paragraph 165A(3) reads:
 ''An appeal under this paragraph lies to an employment tribunal.'' 
I know that the Minister is an expert on employment tribunals, so I should like to ask him about how the system is getting over-loaded. I understand that, last calendar year, there were more than 130,000 employment tribunal cases. Recent legislation, such as the right to flexible contracts, will burden them further. It appears that we are moving further towards a conversation culture, in which people jump at any turn to make appeals to tribunals. 
 Does the Minister feel that the employment tribunal is the right forum in which to hear appeals against demands for costs? Presumably, the Government's logic is that using such tribunals is tidier, more focused and more expeditive than using the county court system or another tribunal. Will he elaborate on that?

Gerry Sutcliffe: I am grateful to the hon. Gentleman for raising the issue. Through dispute resolution and the legislation that we have introduced to deal with problems in the workplace rather than a tribunal, the number of tribunals has decreased. Long may that continue because people resolving their differences around a table is the best remedy.
 When a ballot is held under the statutory procedure, a qualified independent person, as described earlier, is appointed by the CAC to conduct the ballot. Those same appointed persons send information to workers on behalf of the union during balloting. Clause 5 seeks to extend that role to earlier parts of the process. The costs of the QIP's services in holding the ballot are paid for equally by the union and the employer. When the QIP distributes information on behalf of the union, the costs are borne solely by the union. 
 The evidence so far is that the arrangement works well. However, the law provides for the QIP to recover the costs by court order if one or more of the parties fail to pay their share. As the law stands, there is no formal means of appealing against a QIP's demand for costs. Unions and employers should have the right to put their case before a court if they believe that they have been wrongly charged. Indeed, it is not clear whether the current situation complies with the European convention on human rights, and we are anxious to remove any uncertainty. 
 The clause establishes a right for unions and/or employers to appeal against the cost of the services of a QIP or appointed person. Such appeals would be heard by an employment tribunal, which provides a cheap and accessible means of remedying breaches of employment law. 
 We expect the clause to be used infrequently, and hope that parties would be able to resolve any disagreements without recourse to an employment tribunal. We are not aware of any cases in which a QIP has had to seek a court order for the recovery of costs. However, the Government take seriously their commitment to human rights and we therefore wish to ensure that any party that believes that they have been incorrectly billed should be able to seek a court verdict before being required to pay.

Henry Bellingham: I am grateful to the Minister for that explanation.
 Question put and agreed to. 
 Clause 10 ordered to stand part of the Bill.

Clause 11 - Power to amend Schedule A1 to the 1992 Act

Question proposed, That the clause stand part of the Bill.

Henry Bellingham: Clause 11 refers to the
''power of the Secretary of State to amend that Schedule''. 
Will the Minister confirm how the power will be exercised? Will it be by Order in Council? Presumably, it will be done through regulations appearing before both Houses.

Gerry Sutcliffe: The Government aim to ensure that the recognition procedure works smoothly, effectively and fairly. Our review of the Employment Relations Act 1999 found that the procedure worked well overall. However, considerable parts of what is a lengthy procedure are still untested. Inconsistencies or operational difficulties with the process could come to light as the body of cases grows. Therefore, the Government may want to make technical amendments to the procedure without using valuable parliamentary time in amending the schedule through primary legislation.
 When the 1999 Act was drafted, a power to amend the schedule was not included to avoid constant pressure for operational changes during the settling-in period. The procedure has now operated for more than three and a half years and has been broadly accepted as a reasonable settlement. There is much less uncertainty about the effects of the legislation. 
 The clause provides a new power for the Secretary of State to amend any provision in the schedule by order. He or she may do so only if the CAC informs them that the provision in question has an unsatisfactory effect. However, the Secretary of State is not obliged to amend the schedule in the way proposed by the CAC. The CAC is an independent and 
 highly regarded body with much specialist knowledge. Allowing the CAC that role will ensure that the power to amend the schedule will be used for sensible or technical amendments. 
 The new power does not interfere with the Secretary of State's discretion to exercise existing powers to amend particular parts of schedule A1 on her own initiative. The powers include, for example, paragraph (7) of the schedule, which allows the Secretary of State to change the 21-worker threshold. The power will not prevent the Secretary of State from independently exercising other specific powers in the Bill. 
 The power is limited. Orders under the power will be made only by the affirmative resolution procedure. Parliament will therefore have adequate opportunity to scrutinise orders. As a general rule, we will consult interested parties on draft orders before they are tabled in Parliament, as we usually do. The power will allow the Government to respond promptly and effectively to any operational difficulties with the procedure that may arise. We believe that it is a sensible measure.

Henry Bellingham: The Minister said that parties would be consulted as a general rule. Would it not make sense to consult interested parties at all times?

Gerry Sutcliffe: As the hon. Gentleman knows, we have a good track record of consultation. We introduced the 12-week consultation period, and we have consistently kept to that. I accept the point that it is advisable to consult fully, and we intend to do so.
 Question put and agreed to. 
 Clause 11 ordered to stand part of the Bill.

Clause 12 - Means of communicating with workers

Question proposed, That the clause stand part of the Bill.

Henry Bellingham: Clause 12 concerns the means of communicating with workers. I ask the Minister to refer to new paragraph 166A(2) of schedule A1, which states:
 ''The Secretary of State may by order provide that the employer must give to the CAC (in addition to the worker's home address) an address of a specified kind for the worker.'' 
That appears to give power to the Secretary of State to intervene in a particular dispute, because the word ''employer'' in this context presumably means a specific employer, rather than employers in general. It would not be drafted in that way if that were not the case.

Gerry Sutcliffe: The hon. Gentleman is not correct that we are attacking an individual employer. The provision gives the Secretary of State the power, in the light of the provisions of the previous clause, to extend the possibilities for contacting workers by whatever means is appropriate, for instance, by e-mail or other computer technology. Who is to say what the future may bring in terms of communication with employees?

Peter Atkinson: What happens if the worker does not want his or her address to be given by the employer to the CAC?

Gerry Sutcliffe: That returns to the debate that we had this morning on what is reasonable. An application can be made by the employee to the CAC about their concerns over why the use of a particular address would not be appropriate. There is a procedure by which the individual can object on reasonable grounds, but the CAC will decide whether it is reasonable.
 Question put and agreed to. 
 Clause 12 ordered to stand part of the Bill.

Clause 13 - Power to make provision about effect of amalgamations etc.

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: I seek clarification from the Minister about the paragraph in the clause relating to the effect of the change of identity of an employer. Can the Minister give an example of how that would work in practice, because I am not sure about the mechanics of it? Would it relate only to big mergers? It seems as if the Secretary of State would have to move quickly to make an order in cases in which there was a change of identity of employer, and I am not sure that the clause provides the mechanisms that would be required.

Gerry Sutcliffe: I am grateful to the hon. Gentleman for raising that issue. I recognise his professionalism in that area, given his experience in his previous life—or perhaps I should say continuing life. As he said this morning, the world of industrial relations is dynamic. Employers and unions often adapt and change to meet new challenges, changes in economic circumstances and the evolving needs of their customers or members. Companies undergo mergers, transfers and takeovers. Unions amalgamate, join larger unions and sometimes divide.
 Sometimes, the law is not so flexible. Current statutory procedure does not provide clearly for what should happen if the identity of one of the parties changes. If the CAC awards union recognition for an employer, it is not clear what will happen to that award if the business is taken over by a different employer. Likewise, there may be uncertainty about the status of an award for recognition if the original union merges with another and its legal identity changes. The law should provide greater certainty, which is why clause 12 gives the Secretary of State the power to make provisions to deal with such situations. 
 Our policy is that, following a change in the identity of the union or employer, responsibility for awards or outstanding applications should be reassigned to the new employer or union. It is important that, in so far as possible, there is continuity of treatment for the workers concerned. The Secretary of State will be able to make provision not only for where the CAC has 
 already awarded recognition but for where an application is under way. Often when a business transfer or union merger takes place, the circumstances on the ground will not change. The same managers and union reps will be in place, and the structure of the bargaining unit will not have been affected. 
 Applications that go the full distance take a median time of just over four and a half months. Our policy is that, if there is a change in the identity of one of the parties towards the end of the process, months of hard work and negotiation should not be wasted. As the hon. Member for Huntingdon said, there are many complexities. Only part of the bargaining unit might be transferred to a new employer. When a union divides, it may not be clear which of the new unions should have the benefit of the recognition award or be treated as pursuing an application. 
 The recognition schedule deals with many different situations and contains numerous references to the employer and the union. The Government do not believe that the procedure can be amended by applying a simple rule of thumb, which is why the clause contains an order-making power to provide for the detail of the policy in regulations. We will consult on such regulations in draft, and I intend that they will be introduced as soon as practicable following Royal Assent. They will be subject to the affirmative resolution procedure, so Parliament will have ample opportunity to scrutinise them. 
 I hope that my remarks have satisfied hon. Members that the clause should stand part of the Bill.

Jonathan Djanogly: I thank the Minister for that clarification and am pleased to hear that regulations will be introduced to dictate the issues. Will he briefly spell out whether the Secretary of State will delegate the decisions to the CAC? That would seem to make sense.

Gerry Sutcliffe: That is my understanding of what would happen, although I will let the hon. Gentleman know if I am wrong. The CAC will make the recommendations.
 Question put and agreed to. 
 Clause 13 ordered to stand part of the Bill

Clause 14 - Information about union membership and employment in bargaining unit

Henry Bellingham: I beg to move amendment No. 31, in
clause 14, page 13, line 8, after 'specify', insert
', being not less than a period of 7 days'.

Eric Forth: With this it will be convenient to discuss the following:
 Amendment No. 32, in 
clause 14, page 13, line 16, after 'specify', insert 
 ', being not less than a period of 7 days'.
Amendment No. 33, in 
clause 14, page 13, line 25, after 'specify', insert 
 ', being not less than a period of 7 days'.

Henry Bellingham: New paragraph 170A(2) provides:
 ''The CAC may require an employer to supply the CAC case manager, within such period as the CAC may specify, with specified information''. 
Amendment No. 31 would ensure that that period was not less than seven days. That makes sense to me, as it clarifies the specification. New sub-paragraphs (3) and (4) provide that the CAC may require a union and applicant worker respectively to supply specified information, and amendments Nos. 32 and 33 would ensure that that period was also not less than seven days. 
 The amendments are designed to effect a balance, as we are dealing with employers, unions and individual workers. It would be unreasonable to request that such information be provided within two, three or four days, which the Bill will allow, so we propose a period of seven working days. That is reasonable period in which to elicit the information, and it would mean that neither individuals nor employers were put under unnecessary pressure. It is a small amendment, but fair to all concerned. It is completely even-handed across the board. It would simply make it crystal clear that information could not be required within one, two or three working days. There would have to be a minimum of seven days.

Gerry Sutcliffe: I would like to help the hon. Gentleman, but again I cannot take the final step on the amendments.
 Clause 14 places various requirements on employers, unions and, in limited cases, workers to supply the CAC with information. It does so by inserting new paragraph 170A. Amendments Nos. 31, 32 and 33 would ensure that the CAC could not demand that the information be supplied within seven days. They deal with the requirements on employers, unions and workers respectively. All the amendments deal with the same basic issue, so I shall address them together. 
 It may be worth reminding ourselves of the types of information that may be required. In most cases, that will be confined to the names and addresses of individual workers, or the names of individual union members. Often, the numbers involved are small. So far, many cases relating to the CAC have involved 100 or fewer workers. 
 We do not need to give the parties as long as seven days, as a minimum, to produce such basic information, which they will often hold as a matter of course anyway. The amendments would unnecessarily delay the process. The information is limited to that in the possession of the party in question. In other words, that party does not need to gather new data. Again, that lightens the potential burden and ensures that information can be produced quickly. 
 On occasion, the request to supply information may be more complicated and involve assembling a large number of records. I am sure that the CAC would be sensitive to the concerns of the party involved. In such 
 situations, the CAC would not impose excessively short deadlines. It has always acted reasonably in such matters up to now, so we can safely leave it in the hands of the CAC to take decisions about deadlines. There is no need to impose statutory minimums. 
 The amendments would create unnecessary and unwelcome rigidity in the statutory procedures. They could lead to unnecessary delay and play into the hands of those who seek to string out the process. I understand the spirit in which the hon. Gentleman proposed the amendments, but unfortunately I cannot support them. I ask him to withdraw amendment No. 31 and not to press amendments Nos. 32 and 33.

Henry Bellingham: I am sorry that the Minister takes that view. I do not agree that the amendments would add an extra burden to the procedure, make it more complicated or give a rogue employer scope to try to string out the process. We shall return to the issue at a later stage and we might be able to persuade the Minister on it in due course, but in the meantime I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Henry Bellingham: I beg to move amendment No. 4, in
clause 14, page 13, line 9, leave out
'either or both of the following'.

Eric Forth: With this it will be convenient to discuss the following:
 Amendment No. 5, in 
clause 14, page 13, leave out lines 12 to 14.

Henry Bellingham: Amendment No. 5 is consequential on amendment No. 4. I refer the Committee to new paragraph 170A(2). It is important to go through that provision again, so that we can understand what the amendment would do. The paragraph states:
 ''The CAC may require an employer to supply the CAC case manager, within such period as the CAC may specify, with specified information concerning either or both of the following— 
 (a) the workers in a specified bargaining unit who work for the employer''. 
That is fair, but the paragraph goes on to say that the employer may be required to supply specified information concerning 
''(b) the likelihood of a majority of those workers being in favour of the conduct by a specified union (or specified unions) of collective bargaining on their behalf.'' 
 How on earth will the employer necessarily know anything about that? How is he best placed to comment on it? It is asking a great deal to ask the employer to give an objective judgment on the likelihood of a majority of the workers being in favour of the conduct by a specified union of collective bargaining on their behalf. 
 The employer can be asked to state information about workers in a specified bargaining unit. That is fair enough, but asking the employer to make a judgment on the likelihood of employees being in favour of joining a specified union is asking a great deal, and is unnecessary. It would make sense to strike that measure out. I hope that the Minister agrees.

Jonathan Djanogly: I wish to reinforce the points made by my hon. Friend, particularly about employers knowing the extent to which their workers are in favour of a specified union being likely to be recognised. Employers may not know the answer to that but even if they do I cannot understand why they should be forced to give a view on it at all. It is not an issue on which employers should have to give an opinion.
 We hope that most of those things will go through on a friendly basis, but that will not necessarily be the case. There may be a history of industrial disputes and relations may not be good. The measure does not come from the right direction. It asks companies to put themselves in the unions' shoes, and I am not entirely sure why they should have to do that.

Jon Cruddas: Cannot the hon. Gentleman see the opposite side? From where he sits, it may well be to an employer's advantage to make it clear to the CAC how limited the number of prospective union members is, or to give it information on the degree of support for collective bargaining. The clause is not biased one way or the other. It seeks to maximise the information that goes to the CAC, and it should not be interpreted as a tacit nudge toward union recognition, or otherwise. It simply maximises the degree of information available to the CAC when it deliberates.

Jonathan Djanogly: I thank the hon. Gentleman for making that valid point. If the clause were redrafted so that it was voluntary for employers to proffer such information, we would be much more relaxed.

Michael Jabez Foster: Here we are again, suggesting that there is some conflict between the two sides, but that is not the case at all. The measure states that the CAC ''may'' ask an employer if they know what the situation is, if that information will help it to reach a resolution. It is not an obligation and, no doubt, the CAC would ask for such information only in appropriate circumstances.

Jonathan Djanogly: I agree with the hon. Gentleman. In most cases, the CAC would telephone the employer to ask what the situation is, or would call the union. However, the clause provides for conflict situations in which one has to go by the book.

Michael Jabez Foster: It may be that no agreement has been reached about recognition, but that may simply be because the employer has not yet reached a stage at which recognition is thought to be a good thing. That is not necessarily a conflict.

Jonathan Djanogly: I should point out that I am not entirely sure whether this clause deals just with recognition. I think that it applies to the general flow of information to and from the CAC. The Minister might like to comment on that.

Michael Jabez Foster: I would be grateful if the Minister made that clear. In any event, it will not change the principle, which I support, that in such a situation the CAC would want to use its discretion to get the maximum available information in order to pursue its purpose.
 That is all the clause does. It provides the CAC with a permissive right to ask for information from employers. I cannot envisage a situation in which it could be damaging to an employer to be asked that question and to give a truthful answer.

Gerry Sutcliffe: I thank my hon. Friend the Member for Hastings and Rye for getting to the heart of the point and for clarifying the motivation of the clause. I shall speak to amendments Nos. 4 and 5 together. They amend clause 14, which allows the CAC to require the union, the employer and, where relevant, workers to supply it with information that it needs to exercise its functions under the statutory procedure.
 There are a number of points in the statutory procedure, in which the CAC's decision depends on certain tests being applied in respect of the application before it, whether for recognition or derecognition. The first concerns the acceptance or admissibility stage. For an application for recognition to be admissible, the CAC must, among other matters, be satisfied that 10 per cent. of workers in the proposed bargaining unit are members of the union and that a majority of workers in the unit are likely to favour recognition. Conversely, for an application for derecognition to be admissible, the CAC must be satisfied that 10 per cent. of the bargaining unit favours an end to recognition and that a majority of the unit would be likely to favour an end to recognition. 
 Later in the process, the CAC may conduct further checks to establish the validity of a bargaining unit that has been agreed by the parties or decided by the CAC. It may also conduct a check of union membership evidence to decide whether the union should be awarded recognition without a ballot. In order to decide union membership levels in the bargaining unit, the CAC case manager checks the names of union members supplied by the union against the list of workers supplied by the employer. Unions, and sometimes employers, will often submit petitions in support of their application. The CAC case manager will also seek to verify that the workers who have signed a petition are members of the bargaining unit. 
 The CAC currently seeks the voluntary agreement of the parties to provide it with such data. Establishing these voluntary agreements inevitably causes some delay. In some cases, there has been an initial refusal by one party to co-operate. I am pleased to state that the CAC has always managed to find a way around such difficulties and parties have ultimately agreed to disclose the information. However, it is clear that, without the parties' goodwill, the statutory procedure may be delayed or frustrated. That is why we wish to give the CAC an ability to require that information where necessary. 
 Amendments Nos. 4 and 5 would remove the requirement for the employer to supply information that relates to the likelihood of a majority of workers favouring recognition. Opposition Members believe that the employer should only be obliged to provide information about whether he employs a particular worker. Perhaps they are concerned that employers might be required to supply evidence that would assist 
 a union in demonstrating that a majority of workers are likely to favour recognition. I would like to put their minds at rest on that point. The CAC will require information only for the purposes of verifying evidence supplied by the union. In the majority of cases, it will be limited to a list of the workers in the bargaining unit, and will be used by the CAC case manager to prepare and to submit a report to the CAC. The report—not the information—will be copied to the employer and the union. 
 The hon. Gentleman's amendments would have an effect that he would not wish them to have. The power to allow the CAC to require information about the likelihood of workers supporting recognition has been included for good reason. The statutory procedure provides a process for determining not only union applications for recognition, but applications by employers and workers for derecognition. When an employer applies to derecognise the union, he must satisfy the CAC that 10 per cent. of workers in the bargaining unit favour an end to recognition, and that a majority of workers are likely to do so. Those are points that my hon. Friends have made. It is a balancing exercise, which we believe is appropriate. In most cases, the voluntary approach works, but if there is an attempt to delay the process, it is right that the CAC should have that power. I ask the hon. Gentleman to withdraw his amendment.

Henry Bellingham: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 14 ordered to stand part of the Bill.

Clause 15 - ''Pay'' and other matters subject to collective bargaining

Henry Bellingham: I beg to move amendment No. 6, in
clause 15, page 14, leave out line 19.

Eric Forth: With this it will be convenient to discuss the following:
 Amendment No. 36, in 
clause 15, page 14, line 19, leave out from beginning to end of line 4 on page 15. 
Amendment No. 7, in 
clause 15, page 14, leave out lines 20 to 25.

Henry Bellingham: The clause is important. New paragraph 171A(1) makes it clear that
 ''In this Schedule 'pay' does not include terms relating to a person's membership of or rights under, or his employer's contributions to— 
 (a) an occupational pension scheme . . . or 
 (b) a personal pension scheme''. 
The clause excludes from the list of subjects that are part of the collective bargaining process pension schemes, personal or occupational. We touched on this on Second Reading. If there was not agreement across the Chamber, there was at least recognition that to bring pensions into collective bargaining would complicate matters and make collective bargaining 
 much more elaborate. In spite of all the pension crises, this would not be the right way to try to solve the problem. That was the essence of the discussion on Second Reading, although some Government Back Benchers were understandably pushing Ministers on the matter. 
 Pensions are a red hot issue. A company in my constituency, a former subsidiary of Albert Fisher Group plc, Fisher Frozen Foods, went into liquidation and was bought from the receiver by a Belgian company. We had the perverse situation in which people who retired when the company went into receivership were entitled to their full pension, even though they were only in their early 50s, while the pensions of those who stayed on with the company are being cut by about 40 to 50 per cent. It is perfectly obvious that there are real problems. 
 The T and G and I have discussed that matter at some length. Even the T and G takes on board the point that, if pensions were brought into the whole collective bargaining process, it would be complicated. It is difficult to see how it could be achieved in a way that was completely fair.

John Lyons: Does the hon. Gentleman accept that there is widespread support among employees for including pensions in bargaining because it is seen as nothing more than deferred pay? There is genuine concern that employers have been raiding pension schemes all over the country. That is building pressure locally, too.

Henry Bellingham: The hon. Gentleman will have to persuade the Minister of that. I can understand where he is coming from. I do not in any way want to play down the severity of the situation. We all have constituents who are adversely and seriously affected by that. It is undoubtedly destroying family lives. The question is whether it should be brought into the collective bargaining process. We would say no. On the other hand—the hon. Member for Strathkelvin and Bearsden (Mr. Lyons) will be quite pleased about this—the clause holds the door perhaps slightly ajar.
 New paragraph 171A(2) states: 
 ''The Secretary of State may by order amend sub-paragraph (1).'' 
Amendment No. 36 would delete new sub-paragraphs (2) to (7). If the Government are to change the laws of collective bargaining, they should do so not by Order in Council but by primary legislation. This is an important issue. As we know, the opportunities that hon. Members have to scrutinise delegated legislation in this House are often limited. It is difficult for them to attend. Under the affirmative resolution procedure, it is hard to alert them in good time. 
 Some hon. Members, like you, Mr. Forth, are assiduous in their duties. They are hawk-eyed in looking out for examples of a Government using the procedure to change legislation. We feel that this is not the right way of going about it. It is such an important area. By removing this part of the clause, we will reduce any likelihood of the Government 
 being tempted to do so. It will force them to come to the House to make their case through proper legislation.

Malcolm Bruce: This is an important section of the Bill and I suspect that one or two Labour Members may be tempted to contribute. The Government have come to a compromise and said, in a sense, ''We are aware of the problem, so we will take the power to do something about it, but we won't do it yet. In fact, we are not quite sure what we are going to do or when we are going to do it.'' I do not support the amendment but I, like some Labour Members, want a stronger section. There are recent historic reasons for examining the issue, and the hon. Member for North-West Norfolk has acknowledged the problem.
 First, we must recognise that, over the past 10 to 15 years, many previously well-funded pension schemes—often final salary schemes—have hit difficulties. That is not only because of the fall in the stock market, but because of the pension holidays that were voted for when the going was good. If pensions had been a part of the bargaining process, would that have been as easy to do? Those running the schemes would have had to get the consent of the trustees, including representatives of the employees, but they would not have had to negotiate specifically with employees. Those pension funds might have been saved and employers might have avoided subsequent embarrassment. It may have been embarrassing for the directors not to be able to maintain the pension fund, but for many pensioners it caused a substantial decrease in their quality of life and expectations in retirement. 
 As well as pension fund holidays, I have a further concern about many institutions in the City that operated pension funds for companies that bought out their own funds instead of managing them. Those institutions secured permission from the Government to release and pay out orphan funds. Those funds have never been quantified, although figures in excess of £50 billion have been mooted; indeed, Prudential Assurance alone acknowledged £15 billion of such funds. It is sad that that money, which could have plugged the gap that has opened up because of the market downturn over the past few years, has been dissipated in a way that has not secured the future. 
 The impact of changes has sometimes been obtuse and unfair. Currently, there is a controversy at Clydesdale bank, which hon. Members may know is owned by an Australian bank but is one of the four major high street banks north of the border. It used to be known as the Clydesdale and North of Scotland bank, and in my part of Scotland it was the most prolific bank in terms of branches and customers. In that case the policy for staff was changed arbitrarily. Until recently, men and women were allowed to retire early on a full pension, but men have now been excluded from that option. I am surprised that that does not fall foul of anti-discrimination legislation, but legal advice suggests that it does not. 
 I use that case as an example in which employees regard their pension as an integral part of their working conditions, pay and terms. In the context of the Clydesdale bank, those employees are long-serving members of staff and specifically branch managers. Clydesdale bank is sufficiently old-fashioned still to have branch managers; other banks are beginning to think that they should bring them back. It is increasingly difficult to argue against the idea that, whether through the consultation or negotiation process, pensions should be regarded as part of people's negotiated package of pay and conditions. A pension is more than just deferred pay. It is usually contributory, so some pay is taken now, and then invested in trust for an agreed long-term benefit. 
 The first thing to ensure is that the benefit offered is protected; that people at least get what they were promised. It is particularly unacceptable if the pension is adjusted in a way that people do not get what they were promised. Secondly, we must avoid a situation where certain members—namely the older, established members of staff—have one pension and newer employees a different one. Some companies are resolving problems in that way; a sure recipe for friction in a company. 
 I am not only reluctant to support the amendment. I considered tabling my own amendment to do what the Government say they will one day do. I concluded that while I might have felt good about having the debate, I was unlikely to get the amendment passed. I want to say to the Government—I encourage some Labour Members to back me up—that if they recognise that they need to do something about this matter, they must tell us in more detail when and what they might do. There are an awful lot of people out there who have a direct interest in this. It is not just trade unionists or shop-floor workers; it goes from top to bottom, involving anyone who is other than self-employed. 
 The experience of the last 10 or 15 years suggests that that would be in the interests of the taxpayer in the long run, because it would ensure that people retired on good pensions and were not forced back on top-up benefits. It will ultimately be in the interest of well-managed pension funds to recognise that such a thing as raiding orphan funds or awarding pension holidays is a short-term bonus with negative long-term consequences, which is bad for industrial relations, bad for the morale of individual employees and, ultimately, not a very good deal for the taxpayer.

John Lyons: I agree with much of what the hon. Member for Gordon has said in this debate. There is increasing pressure; in my surgery, I meet people all the time who have spent 20 and 30 years working for a company but have been suddenly robbed of benefits that they were promised on the day they started in that organisation. They have faithfully paid the contribution and expected a return; then, quite suddenly, the trustees make changes. A person's life can be ruined by that change at retiral age.
 There is a crisis in the pensions industry and not just in occupational pensions. It is bad enough that it should happen there, but someone in an occupational scheme can face changes in parallel. There might also 
 be major changes to a saving with Equitable Life, or with someone else. Again, plans that have been made for a whole lifetime suddenly have to be put on hold because neither the occupational pension nor some of the supplementary pensions are delivering what was promised. Regularly, people will come to my surgery to explain the situation. 
 There is an issue in terms of bargaining, but we are finishing up with a two-tier work force when it comes to pensions. We have people who have been established in a company for 10, 20 or 30 years and might well be in a final salary scheme. Then there are employees in exactly the same job who have only recently started; they are told that they are valued employees, but they cannot get the pension rights of the person who has been here five, 10, 15 or 20 years. Pressure is building up in the work force and in organisations all over the country. People will quite rightly say that all of us are valued employees and part of a partnership, but that we should not be undervalued when it comes to pensions. They will want to be treated just as fairly and just as properly as someone with a bit of previous service in the organisation. 
 We need to face up to this issue, and deal with it. It is not going to go away. People—I support them—will want to drag that matter on to the bargaining agenda. They will demand that trade unions make an issue of it. They will not be prepared to work without knowing what security they will have at the end of 10, 15 or 20 years. They want to be secure and know that they can promise their family and friends that they will be doing something for their retirement. They will want to know what money they are getting and what is missing. That is why it is important for us to drive this matter on to the bargaining agenda as soon as possible.

Jon Cruddas: I support what the hon. Member for Gordon and my hon. Friend the Member for Strathkelvin and Bearsden said.
 I oppose the amendment, because it would make the situation regarding whether pensions are covered even worse than it was after the Government's ambiguous action in setting up the measure. It would also close the door on the possibility of returning to this matter at a later date, as my hon. Friend the Member for Strathkelvin and Bearsden said. 
 The ambiguities about whether pensions were covered emerged in the 1999 Act. They were clarified in the CAC report on UNIFY and the Nigerian Bank of Commerce, which said that pensions should or would be covered, although the report did not have the status of law that was inferred. The Government are closing the door and opening up the possibility of revisiting the subject in future. I want the Minister to say what circumstances he has anticipated in reconsidering that.

Jonathan Djanogly: I support the amendment and believe that the traditional bargaining topics—pay, hours and holidays—should not be extended beyond the current remit. At the very least, anything touching this area of the law should be done only with full parliamentary
 scrutiny, rather than through the back door of statutory instruments at the order of the Secretary of State. That would be an enormous concern. However, it was fairly interesting to hear the argument.
 Given these proposals, it seems that the Government could be considering including pensions, which would be a grave error. I ask them to think carefully about that. My hon. Friend the Member for North-West Norfolk said that that would complicate matters, and it certainly would. It would be a worse disaster than the £5 billion a year that the Government are currently stealth-taxing out from pensions. We are talking about big sums. This is the perfect measure to encourage companies to move their plants to the far east faster than they are currently. 
 The hon. Member for Strathkelvin and Bearsden spoke about the need to provide workers with security. Pension rights in themselves do not provide security. Time and again in recent years, as pension schemes go bust as companies fold, we have seen that there is no security without a secure company future. The sort of change we are talking about will damage companies' futures. 
 The hon. Member for Gordon made the interesting point that if unions had been more involved in investment in pension funds in previous years, perhaps—he did not speak in absolute terms—a lot of the final salary schemes with a trust behind them would not have been so bad. The Trade and Industry Select Committee addressed that in a recent review on corporate governance. It found that there were hundreds of trade union representatives on most of the pension funds, and they had been there for some time. The TUC acknowledged that that was a big problem; it had not been providing proper training for people going onto the pension schemes, and it was concerned about their knowledge and their liability. 
 I hear what the hon. Member for Gordon says, but it is not something the unions have had nothing to do with. They have been intimately involved with it and regard it as a problem. I am not casting any aspersions on the unions working within the pension schemes, or saying whether they contributed to the problems; just that it is not so straightforward as he said.

Gerry Sutcliffe: This has been an important debate, in which hon. Members have shown their expertise on the emotive issue of pensions. They will be aware that the Government intend to publish a pension Bill shortly that will try to address many of the complex issues that have been raised. I will not get drawn into the issue of the timing of the Bill. However, when speaking to colleagues in the Department for Work and Pensions, it is important to ensure that the Bill addresses all of the key issues that have been raised not only in this debate but in discussions on wider pension issues. It is clearly an emotive issue for the reasons stated by hon. Members, particularly the hon. Member for Gordon, who spoke about the history of some of the schemes and the problems faced by many occupational schemes.
 Mr. Forth, I know that you will want to draw me back to the Bill and the amendments. I found myself somewhere in the middle in terms of how I would approach this point, but I do not want to take anything away from the strength of feeling that has been shown by hon. Members on the issue. 
 I will discuss amendments Nos. 6, 7 and 36 together. Quite rightly, pensions are not currently one of the issues on which employers and unions must bargain under an award of statutory recognition. Those issues currently are pay, hours and holidays. Clause 15 clarifies that pensions are not part of pay for the purposes of the statutory recognition procedure. However, the clause provides a power for the Secretary of State to add pensions to the core topics in future. The Government intend to exercise that power when there is evidence that pensions are being widely bargained on in voluntary agreements. The TUC figures show that 36 per cent. of recognition agreements mention pensions. 
 The purpose of amendments Nos. 6, 7 and 36 is apparently to constrain—as hon. Members have said—the Secretary of State's ability to add pensions to the core bargaining topics in future. Amendment No. 7 would do that by deleting the power that allows pensions to be added as a new core topic alongside pay, hours and holidays. Amendment No. 6 would do it by deleting the Secretary of State's ability to amend the matters that are excluded from the definition of pay. Those matters include what are presently the two principal forms of pension schemes; occupational and personal schemes. Amendment No. 36 essentially repeats the changes sought by amendment Nos. 6 and 7, but also deletes the remaining sub-paragraphs of new paragraph 171A, which would otherwise be redundant. I shall confine my remarks to amendments Nos. 6 and 7, but it should be understood that they apply equally to amendment No. 36. 
 On amendment No.6, it is perhaps understandable that the hon. Member for North-West Norfolk is concerned that the power contained in sub-paragraph (2) of new paragraph 171A might be used at a later date to include pensions in the definition of pay once more. That is not the Government's intention at present. We have been clear that pensions are not part of pay for those purposes. Pensions and pay are closely linked, but they are not the same. 
 The reason for the inclusion of the power in sub-paragraph (2) of new paragraph 171A is not to allow us to include pensions in the definition of pay at a later date. It is included so that the law can be easily amended to take account of new forms of pension scheme that may develop and result in changes to the classification of pensions. 
 We have sought to exclude those matters relating to pensions that are most likely to be the subject of collective bargaining. Those are, broadly, members' 
 rights under a scheme and the employer's contributions to that scheme. While we have considered the issue carefully, it is possible that other pensions matters may emerge and come to our attention that we would also wish to exclude. Therefore, sub-paragraph (2) of new paragraph 171A is a sensible measure, which simply seeks to allow the law to take account of changing circumstances. 
 However, let it not be thought that the Government wish to discourage collective bargaining on pensions. We are proposing a power to add pensions as a bargaining topic in its own right in future. Amendment no. 7 seeks to delete that power. The Government are keen to encourage the renewal of employer-union partnership on pensions and there is a strong interrelationship between pensions and pay. Unions should have as much interest in the future incomes of their members following retirement as they do about the current pay that they receive. That is why it is right to take this power. 
 However, the Government do not believe that it is right to add pensions at this time, because the evidence is that they are only included as an item for negotiation in a minority of voluntary agreements. Encouraging voluntarism has been fundamental to our approach to the statutory recognition procedure. That procedure is designed as a fall-back; a last resort to be used where the employer and the union are unable to reach a voluntary settlement of a claim. 
 We intend to exercise the power when there is evidence of more widespread partner engagements on pensions. To that end, we will conduct periodic surveys of collective bargaining, to monitor what is going on. We recently published research, which is available on the Department of Trade and Industry website, which examines the extent to which pensions have been specified in voluntary agreements signed since 1998. Phase two of that research will examine in more detail the nature of collective bargaining where it is occurring in relation to pensions. 
 The fifth workplace and employee relations survey, which will shortly go into its fieldwork stage, should also provide an early guide. As Opposition Members said, we will undertake consultation before making an order under this power, and the order will be subject to the affirmative procedure. 
 I believe that the Government proposals are balanced and rightly give prime importance to encouraging voluntary engagement in this important issue. We strongly resist amendments Nos. 6, 7 and 36, but take on board the points raised by my hon. Friends. I am sure that we will return to this later. Notwithstanding the strength of the hon. Gentleman's opinion, I ask him to withdraw his amendment.

Henry Bellingham: The Minister has not said why the Government cannot come back to the House with primary legislation on such an important matter. However, I take on board what he has said. He is in a tricky position, and I can see that he is being pushed by colleagues. For me to push him too hard
 from the other direction might be considered unkind, but we will be coming back to this subject later. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 15 ordered to stand part of the Bill. 
 Clause 16 ordered to stand part of the Bill. 
 Further consideration adjourned.—[Charlotte Atkins.] 
Adjourned accordingly at eight minutes to Five o'clock till Thursday 5 February at half-past Nine o'clock. 
Forth, Mr. Eric ( 
 Chairman 
 Atkins, Charlotte 
 Atkinson, Mr. Peter 
 Bellingham, Mr. 
 Bruce, Malcolm 
 Cruddas, Jon 
 Djanogly, Mr. 
 Foster, Mr. Michael Jabez 
 Lyons, Mr. 
 Owen, Albert 
 Picking, Anne 
 Sheridan, Jim 
 Stewart, Ian 
 Sutcliffe, Mr. 
 Tynan, Mr. 
 Williams, Hywel